The Finance Act, 2022 (“the Act”), published on 23rd June, 2022 introduced various changes to several statutes, amongst them, the Income Tax Act, Chapter 470 Laws of Kenya. Section 15 of the Act has amended Section 34(1)(j) of the Income Tax Act by increasing the tax on Capital Gains from 5% to 15%. Consequently, the sellers of land will now be required to remit 15% of the gains from such sale of land as Capital Gains Tax. While this increase could be a move to align the national tax rate to the regional CGT rates, and increase revenue collection in the local property sector, it is noted that this increase could slow down real estate transactions involving the sale of land. This CGT increase will take effect from 1st January, 2023, as provided in Section 1 of the Act.
